[ESTABLISHING A BUSINESS ENTITY IN ARGENTINA]
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rate, according to the following criteria (for fiscal year 2023): a) if the net income of the company does not exceed ARS14.3 million in the fiscal year, a 25% tax rate applies; b) if the net income exceeds ARS14.3 million but is less than ARS143 million, a fixed amount of ARS3.6 million must be paid, plus a tax rate of 30% over the income exceeding ARS14.3 million; and c) if the net income exceeds ARS143 million, a fixed amount of ARS42.2 million must be paid plus a tax rate of 35% over the income exceeding ARS143 million. Withholding tax in dividends: A withholding tax of 7% applies to the payment of dividends. Value Added Tax: the general VAT rate for Argentine local transactions is 21 %. For certain goods or services could be 10,5%. There are also exemptions that may apply. For example, exports are levied at a 0% VAT and exporters can be reimbursed for the local VAT paid related to its exportation. Bank credits and debits tax: credits and debits on local bank accounts are subject to a 0.6 % tax rate on the debits and a 0.6 % tax rate on the credits. In general, depending on the kind of activity of the local entity certain exceptions may apply. There is an additional 1.2% tax rate for cash withdrawals, except for SMEs (Small and Medium Size entities). In general, this tax generates a tax credit of 33% that can be used to offset income tax or its instalments. Customs duties : Import/export of “goods” are taxed at different customs rates according to each tariff position (identification for customs purposes).
Social security taxes (SST): Employers Contribution for SST: The social security tax rate for employers which activities are related to commerce or services and who are not a SMEs 1 is 20,40% and for the rest of employers the tax rate is 18,00%. The health care tax rate is 6%. So, it is 26,4% for the first case and 24% for the second one and it applies on the gross salary. Employee Payment for SST: Please note that the local company shall withhold the relevant social security taxes from the employee’s salaries which represent approximately 17% of the gross salary, health care included. Also, the company shall withhold the income tax from the employee’s salaries if applicable. TAXES ON SHAREHOLDERS: Capital gains tax (Direct or Indirect Sale): In broad terms, direct or indirect sale is taxable at a 15 % on the net gain (sale price minus acquisition cost) or 13.5% of the total sale price (gross price of the operation). There are some requisites to comply with for the indirect capital gains to be taxed. If there is a seller located abroad and in a non-cooperative jurisdiction the tax rate will be higher (35% net gain or 31,5% gross price of the sale). Wealth tax on shares: A 0.50 % tax rate on the book value of the equity held in the local company. The local company pays this tax on behalf of the shareholders. Transfer Pricing Rules: Transfer pricing rules in Argentina follow the OECD Model, based on the principle that transactions between an Argentine company and related companies based outside of Argentina (or with companies located in non-co-operative, low- or no-tax jurisdictions) must be done in arm's length conditions. Argentina’s rules include the five
1 SME: small and medium-sized enterprises.
ILN Corporate Group – Establishing a Business Entity Series
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